Mortgage with Bad Credit History

JRP1414

Hi all,

I would welcome a bit of advice please...

My partner and I are looking to move house very soon and will need to get a new mortgage.

I am 27 years old, my credit history is fine (no missed payments, defaults, etc) and I earn £28k.

My partner's history is not so good. She has 2 accounts that were defaulted in Jan 2010 - a credit card with default balance of £1600 and a loan with default balance of £4500. Both will be fully satisfied next week when we use savings to pay them off. She has had no adverse credit since. She is 34 and earns £35k.

Our current house is actually my partner's and she has paid the mortgage religiously for the last 7 years, so no problems there.

The house we are looking to buy is worth £210k and with equity in our current property plus some inheritence I have, we can afford a 15% deposit.

We took some advice from a mortgage advisor at a local estate agents who advised us to try applying for an agreement in principle with Halifax. At this time we only had a 10% deposit though. We made the application but were automatically refused. The advisor tried to speak to Halifax to query why but they wouldn't give any information.

The current mortgage is with Ipswich BS who have said verbally over the phone that they would consider remortgaging us providing the defaults are satisfied and we have a 15% deposit, however it would have to go to their underwriters to make a decision and they couldn't be 100% sure it would be accepted. I am loathed to keep 'trying' applications as I know it does damage to your credit score.

My questions are:
- Does anyone have any experience of Ipswich lending to customers with satisfied defaults?
- Can anyone suggest any other lenders where we might have success?
- If we are unlikely to be accepted in our current situation, would it be possible to use one or both of my parents as guarantors to improve the situation? They are both 60, my Dad is retired but my Mom is still working as a teacher. What would be the benefits / downsides to this?

Any help you can give would be very much appreciated as we are pretty stumped as to where to go from here!

JRP1414.

Thrugelmir

Just because you've now cleared the defaults , don't think lenders will be rushing to risk their money in a hurry. Slow down a little. Keep your finances in immaculate order for a while. Demonstrate to lenders that you can save money towards a deposit. Bigger the deposit you save up the easier it will become as well to obtain a mortgage.

Only time can heal your partners credit record.

If you had savings you should have settled the defaults earlier.

JRP1414

Hi,

I'm afraid that as with most things in life, it's not that simple!

We have been saving up to pay the defaults off and now (with some money gifted by parents) have gathered enough money to do this, so have done it as quickly as we physically possibly could. At the same time as saving, we have also still been making agreed payments towards the defaulted accounts so it certainly hasn't been easy, but we have done our utmost to turn the situation around.

With regards to waiting longer, I'm afraid that is not much of an option either. We need to move very soon to get our young son into a decent school. We desperately don't want him to go to a school where we live as the area isn't great.

I fully appreciate that lenders will not be rushing to risk their money but I just wondered what the possible solutions are for us (if any).

ACG

With such a small deposit (percentage wise) and the defaults of that amount if im being honest - i wouldnt be confident.

Ipswich are one of the few lenders who accept people as soon as their discharged from bankruptcy so they could be a good first bet.

JRP1414

Hi ACG,

Thanks for the advice.

What sort of deposit would you think would be more likely to be successful? There is a possibility that with help from parents we could push it up to 18%, 20% at a very maximum. Are we still well off the mark?

JRP.

Blackpool_Saver

rent to get the school and carry on saving and getting credit score better

JRP1414

Hi Blackpool,

Yes, that is a thought of ours and not a bad idea. Would really like to buy if we can but certainly a good back-up plan, providing we pass the credit check for the rental :-s

jason1231972

JRP1414 wrote: »

Hi Blackpool,

Yes, that is a thought of ours and not a bad idea. Would really like to buy if we can but certainly a good back-up plan, providing we pass the credit check for the rental :-s

As far as I'm aware (and there may be exceptions, and I may be wrong), defaults won't usually scupper your chances of renting in the private sector. They usually only check for what's known as public information on your credit files - bankrupcty, CCJs, etc. - as far as I can gather.

JRP1414

Oh ok Jason, that's good news thanks.

ACG

Deposit wise deals only usually become available at 5% areas (eg: 10% deposite, 15%, 20%) not 17%, 18% etc.

I would say at 20% you stand a chance of getting a mortgage - presuming the defaults are showing as satisfied, if not then i personally wouldnt have a clue where to look - but i havnt a case with a default that large so its not something ive ever had to research.

becominganobsessivesaver

From personal experience don't necessarily rush to buy a house so that you can get into a school unless you are fully aware of the admissions criteria. I have friends who live in expensive houses close to good schools but didn't get a place at any of their choices, whereas we desperately wanted to move to be near better schools, but due to redundancy etc had to delay, and we got a place at a faith school which (fingers crossed) feeds into an excellent secondary. You will get at least 3 choices when you apply, so there is nothing to stop you putting 2 riskier/further away choices as your first two. Trying to get your deposit up to 20/25% will also help get a better rate mortgage.